Linde Plc Q3 FY2025 earnings call

• EPS of $4.21 grew 7%, operating cash flow grew 8%, and generated $1.7 billion of free cash flow. Backlog remains at $10 billion. - End market trends: Consumer markets (healthcare, food & beverage, electronics) and industrial markets (metals & mining, chemicals & energy, manufacturing) performance discussed. - Proactive steps taken to be recession resistant, focusing on productivity, efficiency, targeted growth, and disciplined capital management.

Consumer-related end markets, making up about 1/3 of global sales: Healthcare is stable and steadily growing with U.S. home care portfolio lapsing by end of 2025; Food and Beverage grows low to mid-single digits; Electronics, at 9% of sales, was the fastest-growing end market this quarter with 6% growth, driven by high-end chip production in Korea, Taiwan, U.S. and growth in nonconsolidated joint venture in Taiwan. Industrial-related end markets, accounting for about 2/3 of sales: Metals and Mining slightly up due to inflationary price increases, region-specific; Chemicals and Energy up 1% due to inflationary price increases, base volumes down; Manufacturing grew 3% year-on-year, with Americas (especially U.S.) seeing solid volume growth, APAC volumes holding steady, China leveling off, India strong growth, and Europe facing challenges.

• Fourth quarter EPS guidance $4.10 to $4.20 (3%-6% growth), assumes 2% FX tailwind and ~2% tax rate headwind. - Full year range $16.35 to $16.45 (5%-6% growth). - Rigorous planning process for 2026 to be detailed in February, with backlog under execution supporting EPS growth.

• Helium and rare gas price pressure from excess supply impacting APAC pricing. - Weak industrial activity in Europe, macroeconomic uncertainty affecting base volumes. - Potential recessionary conditions impacting industrial end markets.

Q: Regarding backlog, any significant new projects in Q4?

A: Sanjiv Lamba said on track to end year with backlog in 7 handle.

Q: Peek into 2026, project startup and price benefit?

A: Rigorous planning process in 2 weeks, backlog under execution supports EPS growth.

Q: Thoughts on pricing sequentially and confidence to continue moving needle?

A: Matt White said to look at year-over-year for pricing alignment with globally weighted inflation, Sanjiv Lamba mentioned helium and rare gases as a drag.

Q: Base or organic volume growth needed for EPS growth algorithm in 2026?

A: Matthew White said capital allocation and management action parts don't need economic help, macro part includes FX and base volumes.

Q: Project backlog and growth beyond electronics in 2026?

A: Sanjiv Lamba said backlog under execution supports growth, pipeline across multiple end markets including steel, chemicals, refining, and decarbonization.

Q: European seasonal shutdowns and trade deals?

A: Sanjiv Lamba said Q4 in Europe likely flat, no near-term catalyst for change, but Germany may see impetus from infrastructure spend.

Q: U.S. manufacturing market risk and customer sentiment?

A: Sanjiv Lamba said U.S. package business grew mid-single digits, but caution remains on larger projects.

Q: Helium and rare gas impact on EPS?

A: Sanjiv Lamba and Matthew White discussed helium and rare gas impact on APAC pricing and EPS.

Q: Chemical industry cycle turn and SG&A?

A: Sanjiv Lamba said chemical industry cycle will turn, SG&A up 9% year-over-year due to M&A, inflation, and restructuring.

Q: European capacity closures and speed bumps?

A: Sanjiv Lamba said rationalization expected, no significant surprises, Tier 1 customers remain protected.

Q: Manufacturing comments and market wins?

A: Sanjiv Lamba and Matthew White discussed manufacturing growth, including U.S. packaged gas business and commercial space.

Q: Electronics growth and industry level growth?

A: Sanjiv Lamba said electronics expected to have robust growth, semiconductor industry expected to grow, gas intensity in advanced nodes increasing.

Q: EMEA margins and levers?

A: Matthew White said EMEA has negative volumes and positive price, margin expansion greater in difficult times, shift to volume in recovery.

Q: Packaged gases demand and regional consolidation?

A: Sanjiv Lamba said U.S. package business growing, opportunities for consolidation globally, especially in U.S.

Q: Europe investment and opportunity pipeline?

A: Sanjiv Lamba said opportunity pipeline for Europe lighter compared to Americas and APAC, but still projects in progress.

Q: AI and new use cases for AI?

A: Sanjiv Lamba said over 300 use cases for AI across operations, sales, and engineering, with AI council ensuring deployment.